The use of hot metal allows Chinese steelmakers to continue to enjoy cost savings in comparison with the use of ferrous scrap, even though production costs have increased following the rises in iron ore prices.
The price rises have followed a recovery in demand after the Lunar New Year on February 4-5 and the knock-on effects of the failure of a Vale-operated tailings dam in Brazil on January 25.
“The gross profit for rebar producers [in China] has fallen to 300-400 yuan [$44.30-59.07] per tonne now, compared with 500-600 yuan per tonne before iron ore prices increased,” an industry source in China told Fastmarkets this week.
China’s hot metal-to-rebar price spread fell to $148 per tonne in the week ending on February 15, from $176 per tonne in the week that ended on January 25, according to Fastmarkets research estimates.
This was $30 per tonne higher on average than the ferrous scrap-to-rebar price spread...